Sebelius calls it quits

April 10 (Bloomberg) -- Kathleen Sebelius, the U.S. health secretary who steered the troubled rollout of President Barack Obama’s signature health care law, will resign just as the program topped its first-year enrollment goal.

The president will announce Sebelius’s resignation tomorrow and name Sylvia Mathews Burwell, 48, director of the Office of Management and Budget, as the health department’s next secretary, the White House said.

A former Democratic governor of Kansas, Sebelius, 65, was an early backer of Obama’s campaign for president. She spent five years running the Health and Human Services Department, presiding over the largest change to government health programs since Medicare and Medicaid began almost 50 years ago.

“From her work on Head Start, to expanding mental health coverage, to advancing cutting-edge health care research and, of course, her unwavering leadership in implementing the Affordable Care Act, Secretary Sebelius often calls her work here the most meaningful of her life,” Dori Salcido, a department spokeswoman, said in an e-mail confirming Sebelius’s resignation.

The move closes the first major chapter of the Patient Protection and Affordable Care Act, known as Obamacare. The 2010 law is projected to eventually offer health insurance to 25 million more people in the U.S., paid for with changes to Medicare, taxes on health-care providers and a requirement that all Americans have insurance.

Surprise decision

Sebelius’s departure was unexpected by at least one person close to her, Kansas Insurance Commissioner Sandy Praeger, a Republican who has worked with her since 1991. Praeger said she was at a dinner where the health secretary spoke last week and that “she seemed like she was in it for the long haul.”

Sebelius told Obama in early March that she would resign, according to an e-mail from the White House. She said the end of the health law’s first enrollment period on March 31 would be “the right time to transition the department to new leadership,” according to the e-mail.

Sebelius and Burwell will join Obama for the public announcement tomorrow at the White House.

Assessing Sebelius’s work, the number of people who signed up for coverage through Obamacare may trump the difficulties in getting there when the new online insurance marketplaces started with flawed technology last October. In total, 7.5 million Americans signed up for private health plans through the exchanges, half a million more than the government’s most optimistic estimates.

‘Key role’

The secretary “played a key role that enabled the Affordable Care Act to become the law of the land, and she worked tirelessly to implement it successfully,” Ron Pollack, executive director of Families USA, a Washington-based health advocacy group that supports the law, said in an e-mail. “We owe her an enormous debt of gratitude for her excellent work in improving health care for families across America.”

That was despite numerous computer issues that stymied early sign-ups. People who tried to use the U.S.-run website healthcare.gov encountered delays, couldn’t log on, or began an application only to see their data vanish in what the Obama administration termed “glitches.” Sebelius was accused by Republicans of covering up or not knowing about the difficulties, which lasted from October until December.

Sebelius took the blame. “Hold me accountable,” she said of the problems at an October congressional hearing.

‘Right’ time

“This is the right decision,” U.S. Senator Lamar Alexander, a Tennessee Republican who sits on a committee that will consider Burwell’s nomination, said in an e-mail from a spokeswoman. “The challenge for Ms. Burwell, or any other successor, is to help Congress find the right way to repair the damage Obamacare has done to American families.”

“I thank Secretary Sebelius for her service,” he said on Twitter. “She had an impossible task: nobody can make Obamacare work.”

Sebelius “did the best she could during the tumultuous and volatile rollout of the law,” U.S. Senator Orrin Hatch, a Utah Republican, said in an e-mail from a spokeswoman.

The White House delayed regulations crucial to the construction of the online marketplaces until after Obama’s 2012 re-election, giving contractors working on healthcare.gov less than a year to finish and test the site.

“We can point fingers in a lot of different directions. I don’t think it’s fair to point them at her, solely,” Praeger said.

If confirmed, Burwell, 48, will bring a background in economics and management to the health position. She was deputy director of OMB during the Clinton administration and also served as chief of staff to then-Treasury Secretary Robert Rubin during a time that included the 1995 budget standoffs that led to partial government shutdowns.

Before joining the Obama administration last year, Burwell was president of the Wal-Mart Foundation. She also previously worked for the Bill & Melinda Gates Foundation, which focuses on global health-care issues.

Obamacare enrollment began to surge in December as the deadline for coverage beginning Jan. 1 approached. That grew further in March, the last month when people could sign up for 2014 health plans, as the program matched, then beat its enrollment goals.

Promoting the law

“She spent a lot of time going to states,” Praeger said in a telephone interview. “I think the HHS putting ads out -- that were very good -- the last month or so, resulted in a big surge the last couple of weeks.”

She wasn’t Obama’s first choice to lead the department. Former Senate Majority Leader Tom Daschle’s nomination to the post stalled after reports he had to pay about $140,000 in back taxes and interest, partly related to chauffeur services. Sebelius’s nomination was announced on Feb. 28, 2009, and she was confirmed two months later.

Sebelius became the point person on Obama’s effort with the new health law, a top campaign promise the president pushed through Congress while dealing with a financial crisis and strong political opposition.

U.S. Representative Nancy Pelosi, a California Democrat who is House minority leader and a close friend of Sebelius’s, said the secretary’s leadership of the health department was “forceful, effective and essential.”

Sebelius “has remained laser-focused on a single purpose: to make health care a right, not a privilege, for all Americans,” Pelosi said in a statement.

State flexibility

Sebelius repeatedly emphasized that the law gave states flexibility to implement it. That included letting them design and set up the marketplaces for people to shop for new insurance. Still, many governors in Republican-led states declined, leaving the U.S. to run more of the markets than it planned.

The insurance components of the law may have been the most debated yet were hardly the entire story. It also contains provisions to improve quality of care and to try and reduce financial incentives that drive up spending, which were just as important to Sebelius, said George Halvorson, former chairman and chief executive officer of Kaiser Permanente, the nonprofit health organization.

“There’s a fairly rich vein of quality-related elements that are pretty much invisible -- important, but invisible,” Halvorson said. “Those were things that she took very seriously and spent time on, to make sure the hospital infection rate reporting happened, for example.”

Budget share

The Health and Human Services Department is the biggest U.S. agency. It spent about $886 billion in 2013 -- a quarter of all federal dollars. The majority of that goes to Medicare, the U.S. health insurance program for the elderly and disabled, and Medicaid, the joint state-federal program for the poor.

Despite the law’s current success, her successor faces challenges. Twenty-four states haven’t agreed to an expansion of Medicaid under the law, which was a key part of providing coverage to the uninsured. The federal government runs insurance marketplaces in 36 states, more than the Obama administration anticipated, after most declined to take on that responsibility.

Before joining the Obama administration, Sebelius was elected as governor of Kansas for two terms, from 2003 to 2009. She also spent about a decade as the state’s insurance commissioner, a role that would prepare her for the job running Obamacare.

She is one of six Obama cabinet members who have remained since the beginning of the administration, including Attorney General Eric Holder and Secretary of Education Arne Duncan.

She is also the first daughter of a U.S. governor to be elected to the same post. Her father, John Gilligan, was Ohio’s governor from 1971 to 1975, according to her biography on the health and Human Services website.

With assistance from Mike Dorning in Washington.

Copyright 2015 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

The parent company of United Airlines and Continental Airlines said Wednesday that Continental has reached a labor agreement with representatives of some 7,200 non-union employees who work as reservation agents and in other passenger-service roles.